Processing over 3 billion daily orders, order processing is vital for achieving sales goals and customer satisfaction. This guide covers its key steps and strategies to optimize efficiency.
According to statistics, about 3 billion orders are processed online every day in the world. Therefore, order processing is regarded as an important link to help enterprises achieve sales targets. The problem is ensuring customer satisfaction and completing the supply chain most effectively. Good order processing is to perform well from receiving orders until customers receive the goods, minimizing complaints. In this article, you will be provided with the most comprehensive instructions about the whole process.
Order processing: A basic definition
This section helps you understand what order processing is and the important steps to consider for your business to achieve business efficiency.
- Definition: In short, order processing starts from taking orders to send products to customers. This process consists of many consecutive steps, such as receiving, verifying, and preparing orders and shipping
- Key Stages: This section explains the order processing steps. After the customer places an order on the online platform, the enterprise provides payment methods, picking up goods, packaging, and shipping. Ensuring that reaches the customer quickly, in the simplest way possible.
- Importance: If order processing is good, it will help customers have goodwill about the business, increase buyback and order fulfillment rates, and become loyal customers. Fast processing orders increase the profit cycle for the business and countless other benefits will be discussed in this article.
Must-have steps in order to process workflow
Let’s explore the stages of the order processing in detail. Businesses need to improve these steps to have perfect order fulfillment. These steps are about optimizing your order processing: A step-by-step guide.
- Order placement: Customers and businesses have many touch points. The touch points where customers can place orders immediately are the business’s website, mobile apps, e-commerce channels, and phone/hotline, alongside traditional direct sales channels. The choice of main channels for sales by businesses is extremely important and determines the speed of processing that order, in addition to reaching most customers.
- Order receipt and verification: After receiving order information from the user, the business will move to the order receipt and verification step. Specifically, after receipting, the supplier will check the status of the product whether it is still available or out of stock, old or new, check customer information, and confirm the payment method. This entire process is called order verification.
- Order picking: The process of order picking will be fast or slow depending on the business’s management system. The business will have employees picking up goods manually or using an automatic picking system. This stage is crucial as it determines whether customers receive products that meet their expectations. Due to the comprehensive preparation of the business, this has improved customer satisfaction.
- Order packing: Based on your business, you can choose the packaging materials that are most suitable for aesthetics, economy, and safe transportation. For orders located far away, you can prioritize packaging carefully to avoid possible damage during shipping. For handmade products, businesses need to take care of the packaging stage, ensuring that the product remains intact and its unique features are preserved from the factory to the customer’s hands.
- Order shipping: Before shipping, businesses need to choose a reputable carrier with suitable prices and shipping times. To ensure that goods are not lost and are easy to control, you should also create shipping labels. These factors ensure that a digitally marked product has complete information and is easy to find.
- Order tracking: Order tracking is essential. With this information, you can know where your goods are, when they are, and when they are expected to be received by your customers, to answer any questions they may have about your service.
- Order delivery: Above are the order processing steps. The final step is to deliver the goods to the customer, ensuring the goods are intact. The attitude of the delivery staff also contributes a large part to the delivery process. If bad, sometimes it means that the customer denies everything including product quality, goodwill to the brand, etc. although sometimes the delivery staff belongs to the partner unit.
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List of benefits of efficient order processing
Effective delivery will bring many benefits to businesses, especially attracting more customers to experience and becoming new customers.
- Improved customer satisfaction: Good order processing will help businesses increase customer satisfaction, thereby selling more orders. When orders are processed quickly and accurately, businesses will sell more orders within a given period. Customers are satisfied and trust the services they choose to purchase
- Reduced costs: Discuss how efficient order processing can reduce costs associated with errors, returns, and customer service inquiries. One of the benefits of order processing is reduced costs. Businesses spend less time and money correcting faulty orders, returning items, or other customer service requests that arise during order processing.
- Increased efficiency: Similarly, effective order processing methods can help businesses utilize the extra time gained from efficient processes to improve overall operations.
- Inventory optimization: Accurate order processing helps businesses maintain optimal inventory levels, reduce the risk of stockouts due to regular purchasing frequency, and avoid overstocking when unable to process orders on time.
- Enhanced scalability: Businesses will sell more and expand their operations, and their scalability capacity will also increase. Businesses are considered to have supply chain optimization to complete the process.
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Comparison between order processing vs. order fulfillment
Order processing is a step in order fulfillment, but there are still many misconceptions about these two concepts. See the table below to understand the concepts clearly.
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Order processing
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Order fulfillment
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One step in order fulfillment
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The whole process
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The process from ordering to delivery
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The process from inventory handling to order fulfillment (consisting of order processing)
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Key differences: The basic difference between order processing vs. fulfillment is which definition includes which definition. Order processing includes the steps of preparing for delivery, while order fulfillment includes the entire process from placing an order to receiving the goods and after-sales programs.
Relationship: Therefore, the definition of order fulfillment is a broader concept that includes small steps in order processing. Good order processing means more complete order fulfillment. Observe the process of order fulfillment, as shown in the figure below, to know which process is in the chain.
Order processing vs. order fulfillment: Understanding the difference
Order processing software for reference and its benefits.
There are many business support software, and one of them should invest in order processing software because it provides practicality and a way to improve order processing efficiency.
Features and functionalities
- Order entry and management: The software includes features to support automatic order entry due to data from channels, order tracking, and order status updates at any time.
- Inventory management: Order processing software can be connected to the warehouse management system. One of the utilities is that businesses can track inventory levels and alert when reaching a preset number, automatically reordering goods, avoiding the situation of running out of stock and not being able to receive new goods in time.
- Payment processing: This software integrates with existing payment gateways to allow users to pay quickly in many ways, creating a seamless and secure experience instead of separate management software.
- Shipping and label generation: Shipping labels, product labels, or carrier names are also saved synchronously on the order management system. This helps you manage and track all orders with the most complete information with only the labels created by it.
- Customer communication: It is convenient when the software can replace customer service staff in stages such as order confirmation, delivery notification, or additional information that the business wants to send on a case-by-case basis.
- Reporting and analytics: One of the key features of this software is the ability to perform statistics, reporting, and analysis to track business indicators and factors that require timely improvement
Advantages of automation:
- Increased efficiency: Automation reduces human effort, increases processing time, and accuracy, and saves time.
- Reduced errors: Automation helps reduce human mistakes caused by manual inventory entry, order management, and other administrative steps.
- Improved customer satisfaction: Fast and accurate order processing improves customer satisfaction.
- Cost savings: Software replaces employees and solves many problems in the process chain, thus reducing labor costs and still ensuring work efficiency.
Popular software solutions:
Here are the top order processing software solutions for your business.
- [Software 1]: [SAP S/4HANA] – SAP S/4HANA is an ERP system with real-time order processing and analytics with features like order tracking, inventory management, and automated workflows. SAP S/4HANA is the latest version of the SAP ERP (Enterprise Resource Planning) business management system. Developed by SAP SE, SAP S/4HANA helps optimize business operations by integrating business, financial, human resources, and resource management processes into one system.
- [Software 2]: [Oracle Order Management Cloud] – It offers end-to-end order visibility and control with key features like order processing, orchestration, inventory management, and pricing. (Oracle Cloud is a cloud computing service provided by Oracle Group that supports storage, servers, applications, and networking services on a cloud platform through a global network system connecting Oracle data centers.)
- [Software 3]: [NetSuite Order Management] – NetSuite’s cloud-based tool streamlines order management processes with these features: omnichannel order capture, fulfillment, and returns processing. In more detail, NetSuite Order Management automates the life cycle management of orders from customer orders to delivery and after-sales service. Ensure that accurate records are stored, including order confirmation, planned order receiving quantity (order release), and order confirmation.
The ways to improve order processing efficiency
Putting the above ideas together, there are many ways you can do to have order processing efficiency.
- Optimize workflow: Businesses need to standardize processes, eliminate old inefficient processes that cause bottlenecks, choose optimal software, and automate tasks. The application of automation tools and the selection of the right software solutions can completely change the enterprise itself during the development process. It enables businesses to meet the growing demands of customers and lead the competition in the market.
- Utilize technology: As discussed about the benefits of software and how they can help reduce human work, having an order management system is very important. Businesses may spend more money on buying software to use and maintain it in the initial stage. However, after a while, the efficiency and processing speed of this software will bring a huge benefit to the business in both time and money.
- Inventory management: Order processing software helps manage inventory accurately and process orders and inventory efficiently. This is demonstrated by controlling inventory levels to avoid overstocking or running out of stock before placing new orders. The system helps maintain a safe level of inventory so that businesses can manage without being surprised by unexpected events.
- Employee training: The most important thing is still the human factor. Businesses need to train human resources to be able to handle order issues with software or manually appropriately. Businesses need to continuously train their employees to help them improve their skills to adapt to technological developments, contributing to the overall success of the organization by increasing revenue.
Conclusion
To sum up, order processing is essential to supply chain management and e-commerce. Strategies that have been presented into practice to improve customer satisfaction and streamline processes are also effective order fulfillment. Visit SourceVietnam.com to find more about the benefits of good order processing and its support software.
FAQs about order processing
What is order processing?
Order processing starts with taking orders to send products to customers. This process consists of many consecutive steps, such as receiving, verifying, and preparing orders and shipping
What are the steps involved in order processing?
They are: order placement, order receipt, and verification, order picking, order packing, order shipping, order tracking, and order delivery.
How can I improve my order processing efficiency?
You can improve your order processing by optimizing workflow, utilizing technology, inventory management, and employee training.
What is the difference between order processing and order fulfillment?
Order processing refers to the internal steps a business takes to manage and prepare an order after it is placed, such as order entry, inventory checks, payment processing, and packaging preparation.
Order fulfillment is the broader process that includes order processing but also covers picking, packing, shipping, and ensuring the order reaches the customer accurately and on time.
In short, order processing is a subset of the overall order fulfillment process.
How does order processing differ from order fulfillment?
Order processing consists of taking orders to the delivery step and order fulfillment starts from inventory handling to after-sale programs.
What are the benefits of using order processing software?
Order processing software improves efficiency, reduces errors, provides real-time tracking, enhances customer satisfaction, centralizes management, saves costs, and offers scalability and data insights for better decision-making.
How can businesses improve their order processing efficiency?
Businesses can improve order processing efficiency by automating workflows, using real-time inventory tracking, integrating systems, optimizing warehouse operations, and training staff. Monitoring performance metrics and outsourcing to 3PL providers can also enhance accuracy and speed.
